Safety Net Hospitals Blast 340B Program Cuts

Threaten to sue CMS

WASHINGTON -- Cuts to safety net and teaching hospitals for drug payments in a new Medicare payment rule incited a backlash, including legal threats, from some hospital and advocacy groups, but drew accolades from some cancer advocacy groups.

"As part of the President's priority to lower the cost of prescription drugs, Medicare is taking steps to lower the costs Medicare patients pay for certain drugs in the hospital outpatient setting," said Seema Verma, Administrator for CMS, in a press release, announcing the new rule.

Medicare beneficiaries would save about $320 million in 2018 on copayments due to the discounts hospitals receive through the 340B program, Verma noted.

Rural sole community hospitals, some cancer hospitals, and children's hospitals would be excluded from the change. Nonetheless, hospital groups and at least one advocacy organization slammed the new rule.

"We see no reasonable rationale for diverting Medicare Part B reimbursement from hospitals in the 340B Drug Pricing Program -- those in greatest need of support -- to providers not eligible for 340B discounts. Congress clearly intended that the 340B program help hospitals that care for many vulnerable patients; this new policy subverts that goal," said Bruce Siegel, MD, MPH, president and CEO of America's Essential Hospitals, in a press release.

Darrell Kirch, MD, president and CEO of the Association of American Medical Colleges, said in a press statement that the rule would "drastically reduce" payments to teaching hospitals and squeeze critical services.

"Let's be clear. This rule does not address high drug prices. If policymakers want to address rising drug costs, they should do so directly -- not by penalizing providers that help their communities through the 340B program. Our vulnerable patients deserve better," Kirch said.

Litigation Threatened

"We will pursue all options moving forward, including joining with the American Hospital Association and America's Essential Hospitals in legal action to prevent this harmful cut from going into effect," he added.

Ted Slafsky, president and CEO for 340B Health, an advocacy group for hospitals participating in the program, called the rule "a gift to for-profit cancer clinics who shun the poor, uninsured and underinsured."

In a press statement, Slafsky cited a survey of hospitals in which respondents warned of cuts to services, such as substance abuse treatment, cancer treatment, behavioral health programs, transportation, and care coordination, which they are able to provide because of savings from the 340B programs.

Slafsky also cited the possibility of legal action, because the rule "undermines Congressional intent behind the 340B program" and CMS lacks the authority to "target" 340B hospitals.

Taking the opposite view, the Community Oncology Alliance (COA) applauded the new rule for attempting to "curb abuses of the 340B Drug Discount Program."

"The Administration took a huge step today towards fixing the 340B program and should be roundly commended," said Ted Okon, executive director of COA. in a press release. "Because of their leadership seniors will see lower prescription drug costs and taxpayers will save money. Now Congress has to act to legislate greater transparency and accountability from 340B hospitals so that patients benefit from this critical safety net program, not mega hospital corporations profiting from it."

Other Payment Changes

The final rule also raises outpatient hospital payment rates by 1.35% for 2018 and the agency anticipates "an overall impact of 1.4% payment increase for providers," CMS stated in a fact sheet.

Other changes in the new rule include a two-year freeze on enforcing the direct physician supervision requirements for rural hospitals with 100 beds or fewer and critical access hospitals for outpatient therapeutic services (a previous moratorium expired last December).

And the agency touted its decision to eliminate reporting requirements for three quality measures for ambulatory surgical centers and six quality measures in outpatient hospitals -- the latter predicted to save hospitals nearly half a million hours of documentation in 2020.

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